Socking away cash to protect against a future financial institution collapse would weaken initiatives to strengthen the economy and create jobs today, insurance groups are telling the leaders of the Senate Banking, Housing and Urban Affairs Committee.

The groups are asking the committee leaders to kill efforts to make large financial institutions pre-fund a “systemic risk resolution fund,” or bailout fund.

A provision in H.R. 4173, the Wall Street Reform and Consumer Protection Act bill, would finance the fund by imposing assessments on financial institutions with more than $50 billion in assets.

The House is set to take up H.R. 4173 on the floor Wednesday.

The Senate Banking Committee is drafting a bipartisan financial services bill similar to the House bill. The committee hopes to have a bill ready for committee consideration before Congress departs for the Christmas recess.

The H.R. 4173 system risk fund provision would create a fund with up to $150 billion in reserves.

To create a $100 billion fund, large financial institutions would have to pay more than $13 billion per year for the next 5 to 6 years, insurance groups and other financial services groups write in the letter.

“A new pre-funded systemic fund would threaten the economic recovery by diverting capital from job creation when previous efforts to augment capital are beginning to have an impact,” the groups write.

“Further, there is no evidence that the existence of such a fund would deter the creation of new asset bubbles or other market distortions,” the groups write.

The groups with representatives signing the letter include the American Council of Life Insurers, Washington, along with several property-casualty insurance groups, general financial services groups, and the Securities Industry and Financial Markets Association, New York.